New Ltd Co, do I pay vat on my shares?

[Nick D]

Hi,

I have a question, I have formed a one person ltd company and have invested £1000 as share capital (1000 x £1 shares), as i am the owner of the company, am i right in assuming that this is vat exempt as no supply has been made?
or do i have to pay vat on this?

Thanks in advance,

NickD

[KM-Tiger]

The investment would not attract VAT, but to invest £1000 as Share Capital is probably not the best strategy, as you will never be able to get that capital back in a tax efficient manner. To lend the company £1000, as a Director's Loan, would mean you could withdraw that cash tax free at any time.

You might do well to get some advice from an accountant. Most will give a free initial consultation.

[Kevin Hall]

Hi,

I have a question, I have formed a one person ltd company and have invested £1000 as share capital (1000 x £1 shares), as i am the owner of the company, am i right in assuming that this is vat exempt as no supply has been made?
or do i have to pay vat on this?

Thanks in advance,

NickD

VAT caselaw has indicated that the issue of new shares by a company is neither VATable nor VAT-exempt. It is simply not a transaction at all and no VAT is charged on the "income" (i.e. capital) received from the share issue.

Hope that helps?

[accountancyextra]

Nick,

No VAT due, but as KM-Tiger has already pointed out, £1,000 share capital may not be the wisest move, especially if you are sole shareholder.

You should give your accountant a call asap to discuss your specific circumstances